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The Spanish prime minister's plans for a 2019 budget have hit a setback today. Despite the "optimism" expressed by the economy minister, Nadia Calviño, that Brussels would approve the draft, the European Commission (EC) is not convinced.

The EC has sent the Spanish government a formal letter questioning the draft that prime minister Pedro Sánchez submitted on 15th October. They ask for clarification of multiple aspects of the plan and say it's not clear how Spain plans to meet the deficit reduction efforts required by European fiscal rules for 2019.

According to the EC, the document "doesn't give the complete vision of the planned measures". They ask the Spanish government to "provide all the necessary information about the various measures". The main issue for Brussels is how the government plans to meet its deficit reduction obligations: "the reduction in structural deficit for 2019 is up to 0.4% of GDP", which is still "below the 0.65% of GDP [level] required by the Council's recommendations of 13th July 2018".

As such, they say, "on the basis of the limited information available, we cannot rule out that there might be a risk of a certain deviation when it comes to the required effort". The letter asks Sánchez to send an updated draft to the CE and the Eurogroup by 22nd October and to "inform us of any decision on fiscal matters which could be taken in the coming weeks".

The Commission ends the letter saying that it "hopes to continue having a constructive dialogue with Spain in order to reach a final agreement".

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